It’s likely you own a credit card, but you may not be aware of all the benefits they offer.
Although you realize they’re convenient financial products that can be used for everyday purchases, their advantages go far beyond that.
Credit cards offer a wide range of benefits, so we turned to the experts for details.
1. When you use your cards, you may receive rewards and perks
The rewards are what Ted Rossman, an industry analyst for CreditCards.com, immediately thinks of when thinking about credit card advantages.
The best credit cards, whether they offer cash back or travel rewards, Rossman said, provide account holders with worthwhile ancillary benefits.
In addition, Rossman mentioned free access to airport lounges, TSA PreCheck and Global Entry, priority boarding, free checked bags, rental car insurance, cellphone insurance, roadside assistance, and reimbursement for additional costs incurred because of delayed or canceled flights and lost or delayed luggage.
According to Rossman, some cvv me credit cards also offer concierge services.
Rossman continued, “You could use concierge service to help plan a trip or secure a sought-after restaurant reservation or difficult-to-find sports or theater tickets.
But be aware that some cards don’t provide benefits or rewards.
A number of issuers also offer introductory bonuses to new cardholders.
2. Your credit score can be built by using your cards responsibly
According to Judith Corprew, executive vice president and chief compliance and risk officer at Patriot Bank, “using credit cards responsibly and consistently is a good way to build your credit score by charging goods and services that you can afford and then paying off the full statement balance every billing period.”
Your track record of timely payments and having credit available that you aren’t using both contribute to your credit score (which improves your credit utilization). Your credit score is 65% determined by these two elements.
Keeping your credit utilization as low as you can is crucial for your credit score.
Corprew cautioned that there are important things to keep in mind.
Use your credit cards regularly, even if only for minor purchases, and always pay them off in full.
If you don’t pay off the entire balance each billing cycle on your credit card, interest can accumulate very quickly.
Additionally, using credit cards frequently encourages overspending because many users don’t feel as though they are paying with “real” money as when using cash.
If you have credit cards, it makes sense to use them frequently, even for small purchases, and to always settle the balance in full, according to Corprew.
3. Credit cards can be used to start a business
One of the biggest myths about credit cards, according to Brock Blake, founder and CEO of Lendio, is that they can’t be used to fund startups.
Credit cards can be helpful in starting a business in addition to offering benefits for personal use.
In comparison to startups, businesses that have been in operation for three years or more may have more options for financing, according to Blake.
Both personal and business credit cards are useful in this situation because they could be your only viable option for starting your business.
They not only have a lot of benefits, but they can also assist you in funding the company of your dreams, according to Blake.
For instance, if you are approved for a credit card with 0% interest, you could buy some much-needed business equipment and pay it off without accruing interest.
Just remember that 0% interest offers have an expiration date; for consumer credit cards, this is typically 12 to 15 months, though some issuers offer 18 months of 0% interest. Many business cards have 12-month 0% interest periods.
Using credit cards to launch your business can also help you control your cash flow, according to Blake.
Blake said that while business owners are aware of their ability to generate sales and expand, they also recognise the need for immediate financial support.
A credit card can assist you in making the initial inventory purchases if you have faith in your product-market fit and ability to generate revenue, Blake continued.
4. You can stay organized with credit cards
According to Kinane, using credit cards enables you to keep tabs on your overall spending through your credit card bill or your online account, which can help you create a budget and identify areas where you can make savings throughout the year.
Some cards, like the Apple Card, even offer tools for managing your personal finances online or via your smartphone.
To see where you spent the most money, print out your credit card statements and highlight purchases by category with various coloured highlighters, Kinane advised.
5. The right card can be found for you
The ability to select the credit card that best suits your needs is another significant perk of credit cards, according to Kinane.
For instance, if you frequently eat out, you might want to think about getting a credit card that offers greater restaurant rewards.
Or, if you commute or travel frequently, a card with rewards specifically for gas might be what you need. Those who have multiple credit cards should prioritize using the right card for each type of purchase to maximize rewards, according to Kinane. Also, you can buy cheap rates with J-stashes.
6. Purchases and prices are protected by credit cards
Most credit card issuers offer purchase protection, which allows cardholders to claim damaged or stolen items within a limited time after purchase, Kinane noted.
You could be eligible for a refund if your new iPad comes in more pieces than an IKEA desk.
According to Kinane, some card issuers will provide a refund on a purchase if the retailer lowers the price of the item within a predetermined window.
If you buy a TV for $500 and the price drops to $350 a week later, for instance, you might be qualified for a refund of the difference, according to Kinane.
Because many card issuers have recently discontinued this coverage, be sure to ask your card issuer what its policies are regarding price protection. For instance, price protection benefits were discontinued by Citi, USAA, and Barclays all in 2019.
Other types of benefits, such as travel insurance and cell phone protection, may be available from credit card issuers.
7. Paying with a credit card is safer
Because they are not linked to the money in your bank account, credit cards are safer. According to April Lewis-Parks, education & communications director for Consolidated Credit, all credit cards offer some type of fraud protection, which means you are not liable if your card is stolen and someone racks up large bills.
According to Mike Kinane, head of U.S. Bankcard at TD Bank, if you believe your credit card has been stolen or you notice suspicious charges on your credit report, your credit card issuer can quickly cancel your card, correct the situation, and is typically able to cover the fraudulent charges.
When fraudulent charges are made to a credit card account, customers are safeguarded by the Fair Credit Billing Act (FCBA).
According to federal law, a customer is only liable for a maximum of $50 in unauthorised credit card charges.
As a preventative measure, Kinane suggested that you set up transaction alerts, which will alert you whenever your card is used to make a purchase that exceeds a certain threshold and may help you identify fraud.
8. When traveling overseas, credit cards are a good choice (just watch out for fees).
Using a credit card when traveling abroad, according to Dr. Sandi Webster, CEO & Chief Learning Officer of Sandi Webster LLC, is much preferable to carrying a sizable amount of cash that could be lost or stolen.
However, if you do intend to use a card to make purchases while traveling, be sure to pick one that does not impose a foreign transaction fee.
The currency exchange rate may be in your favor by the time the charge is processed to your card, which can sometimes result in a break for you, said Webster.
9. Credit cards can be used to pay bills automatically
You neglected to pay your bills? Do not be alarmed; it does occur, but it need not. You can relax knowing that all of your accounts will be kept current thanks to automatic payments. With the help of this benefit, you can easily avoid late fees and maintain the use of your card.
You can raise your credit score by keeping your credit card open and then paying off the balance. This is so because your credit score is influenced by the length of your credit history.
To ensure that you never forget to pay either your credit card bill or your balance, you can set up automatic bill payments in your bank account. As payment history determines your credit score, doing this will prevent a damaging impact.
You can set up automatic bill payments in your bank account to pay both your credit card bill and your balance, ensuring that you never forget to do either. Due to the fact that your payment history accounts for 35% of your FICO score, this will prevent you from having a negative effect on your credit score.
